Quinn Emanuel Urquhart & Sullivan LLP won $185 million in attorneys’ fees for representing a class of 153 qualified health plans awarded a total of $3.7 billion against the federal government in an Obamacare payment case.
This is the full amount requested by the firm, and it represents 5% of the plans’ recovery. A total of $12 billion altogether has been awarded to the dozens of insurers that sued to recover unpaid “risk corridor” funds.
The firm was the first to file a lawsuit against the U.S. for reneging on Obamacare’s promise to pay them for losses suffered due to an influx of new members during the law’s first three years of operation, the U.S. Court of Federal Claims said.
It also came up with the theory that the Affordable Care Act section under which the U.S. owed the funds was a money-mandating statute—meaning the plans could recover under the Tucker Act, which provides for a contract-style cause of action against the government, the court said.
The court adopted the percentage of fund approach for calculating Quinn Emanuel’s fees. In common fund cases, every class member has an undisputed claim to a lump-sum award, the court said. Awarding attorneys’ fees based on that full award guarantees that each class member pays its fair share, it said.
Under the lodestar approach sought by objecting members of the class, a fee award is calculated by multiplying the number of hours class counsel reasonably billed by their appropriate billable rates, the court said. A “risk multiplyer” may be used to adjust the rate, it said. Utilizing this method here would leave Quinn Emanuel with less than $9 million in fees.
The lodestar method is “‘difficult to apply, time-consuming to administer, inconsistent in result, and capable of manipulation,’ and it creates incentives for inefficiency,” the court said. Here, it also would end “in a grossly disproportionate fee award to Class Counsel in comparison to the complete recovery obtained by the classes,” it said.
The court also found the request reasonable, given the amount of work put into the long-running litigation by Quinn Emanuel’s attorneys. This included assisting other plans’ attorneys when their clients’ cases were paused. It also noted the plans won 100% of the damages they sought.
But it refused to award incentive payments to Health Republic Insurance Co. and Common Ground Healthcare Cooperative out of the fee award. The payments might have violated attorney ethics rules prohibiting fee-sharing, the court said in Thursday’s opinion by Judge Kathryn C. Davis.
Sheppard Mullin Richter & Hampton LLP represented the objectors.
The case is Health Republic Ins. Co. v. United States, Fed. Cl., No. 17-cv-877, 9/16/21.